4. Financial Overview
Executive Summary
The Life Care Platform solves a universal problem: People know what they should do for their health and life, but they don't follow through. Our lightweight Per Employee Per Month (PEPM) model allows Employer Groups and DPCs to offer a high-value benefit at massive scale.
All projections are illustrative and based on conservative penetration and conversion assumptions; they are not guarantees.
Distribution Model:
- Employer Groups / Section 125 Benefit Plans – embedded at $0.65 PEPM
- DPC Clinics – bundled into membership models
- Premium Upsell Layer – consumer-driven enhanced support upgrade at $165/month
5-Year Revenue Projection: $1.2M → $8.3M → $31.9M → $81.5M → $165.6M Annual Recurring Revenue (ARR)
Gross Margin Profile: ~87% in Year 1, reaching ~90% from Year 2 onward, driven by AI automation and minimal human labor
EBITDA Margin Evolution: ~10% → 41% → 54% → 66% → 72%
Capital Requirement: $1.6M seed round to build the platform and distribution needed to scale to ~6M covered lives by Year 5
Valuation Framework
Local LifeCare is evaluated using revenue multiples common to tech-enabled care, AI-powered benefits platforms, and virtual care infrastructure.
Applied to Year-5 Revenue: $165.6M
| Scenario | Revenue Multiple | Valuation |
|---|---|---|
| Conservative | 2× | $331M |
| Standard | 4× | $662M |
| Aggressive | 6× | $993M |
Illustrative valuations using revenue multiples typical for tech-enabled care; not a forecast of actual transaction terms.
Reasons for premium multiples:
- Creates a new category: Life Care Platform
- Employer Group distribution enabling multi-million-life onboarding
- Ultra-low cost per user enabling 90% gross margins
- AI automation supports 1:2500+ support ratios
- Recurring PEPM revenue + high-Average Revenue Per User (ARPU) upsell
- 60k premium users at maturity (1% of 6M)
- Near-zero marginal cost per additional user
Revenue Model
Local LifeCare monetizes through three tightly integrated channels. All are recurring revenue with predictable scaling.
Track 1: Employer Group / Section 125 Plans (Primary Distribution)
Pricing: $0.65 PEPM
Covers medication adherence, daily reminders, coordination, and life-management support.
Lives Under Management (Y1–Y5): 100k → 500k → 1.5M → 3.0M → 5.0M
Annual Employer Group Revenue:
- Y1: $0.78M
- Y2: $3.90M
- Y3: $11.70M
- Y4: $23.40M
- Y5: $39.00M
Track 2: Direct Primary Care (DPC) Distribution
Pricing: $0.65–$1.00 Per Member Per Month (PMPM) depending on clinic structure
Lives (Y1–Y5): 50k → 150k → 300k → 600k → 1.0M
Annual DPC Revenue:
- Y1: $0.39M
- Y2: $1.17M
- Y3: $2.34M
- Y4: $4.68M
- Y5: $7.80M
Track 3: Premium Upsell (Enhanced Support at $165/month)
Product: Upgraded support with expanded coordination and advanced accountability workflows
Pricing: $165/month ($1,980/yr)
Upsell Conversion (Realistic Ramp):
- Y1: 0%
- Y2: 0.25%
- Y3: 0.50%
- Y4: 0.75%
- Y5: 1.00%
Total Lives Across Channels (Y1–Y5): 150k → 650k → 1.8M → 3.6M → 6.0M
Upsell Revenue:
- Y1: $0
- Y2: $3.22M
- Y3: $17.82M
- Y4: $53.46M
- Y5: $118.80M
5-Year Pro Forma Financial Projections
Executive Financial Dashboard
| Key Metrics | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Total Revenue | $1.2M | $8.3M | $31.9M | $81.5M | $165.6M |
| Gross Margin | 87.0% | 90.0% | 90.0% | 90.0% | 89.7% |
| EBITDA | $0.1M | $3.4M | $17.2M | $53.9M | $119.5M |
| EBITDA Margin | 9.7% | 41.0% | 53.9% | 66.1% | 72.1% |
| Lives (Total) | 150K | 650K | 1.8M | 3.6M | 6.0M |
| Premium Members | 0 | 1,625 | 9,000 | 27,000 | 60,000 |
| Cash Position | ($0.1M) | $2.9M | $19.0M | $71.4M | $188.9M |
| Valuation (4x) | $4.7M | $33.2M | $127.4M | $326.2M | $662.4M |
Comprehensive Income Statement
| Metric | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| REVENUE | |||||
| Employer Group Revenue ($0.65 PEPM) | $780,000 | $3,900,000 | $11,700,000 | $23,400,000 | $39,000,000 |
| DPC Revenue ($0.65-$1.00 PMPM) | $390,000 | $1,170,000 | $2,340,000 | $4,680,000 | $7,800,000 |
| Premium Revenue ($165/mo) | $0 | $3,217,500 | $17,820,000 | $53,460,000 | $118,800,000 |
| Total Revenue | $1,170,000 | $8,287,500 | $31,860,000 | $81,540,000 | $165,600,000 |
| COST OF REVENUE | |||||
| Infrastructure (AI, Cloud, Messaging) | ($117,000) | ($663,000) | ($2,549,000) | ($6,523,000) | ($13,680,000) |
| Support Operations (1:2500 ratio) | ($35,100) | ($165,750) | ($637,200) | ($1,630,800) | ($3,312,000) |
| Total COGS | ($152,100) | ($828,750) | ($3,186,200) | ($8,153,800) | ($16,992,000) |
| Gross Profit | $1,017,900 | $7,458,750 | $28,673,800 | $73,386,200 | $148,608,000 |
| Gross Margin % | 87.0% | 90.0% | 90.0% | 90.0% | 89.7% |
| OPERATING EXPENSES | |||||
| Product & Engineering | ($350,000) | ($1,657,500) | ($4,779,000) | ($8,154,000) | ($11,592,000) |
| Sales & Commercial | ($280,000) | ($1,325,000) | ($3,824,000) | ($6,523,000) | ($9,936,000) |
| General & Administrative | ($175,000) | ($828,750) | ($2,390,000) | ($4,077,000) | ($6,624,000) |
| Compliance & Legal | ($100,000) | ($250,000) | ($500,000) | ($750,000) | ($1,000,000) |
| Total OpEx | ($905,000) | ($4,061,250) | ($11,493,000) | ($19,504,000) | ($29,152,000) |
| EBITDA | $112,900 | $3,397,500 | $17,180,800 | $53,882,200 | $119,456,000 |
| EBITDA Margin % | 9.7% | 41.0% | 53.9% | 66.1% | 72.1% |
Key Operating Metrics
| Metric | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| LIVES UNDER MANAGEMENT | |||||
| Employer Group Lives | 100,000 | 500,000 | 1,500,000 | 3,000,000 | 5,000,000 |
| DPC Lives | 50,000 | 150,000 | 300,000 | 600,000 | 1,000,000 |
| Total Lives | 150,000 | 650,000 | 1,800,000 | 3,600,000 | 6,000,000 |
| Premium Members (Conversion %) | 0 (0%) | 1,625 (0.25%) | 9,000 (0.5%) | 27,000 (0.75%) | 60,000 (1.0%) |
| UNIT ECONOMICS | |||||
| Blended ARPU/Month | $0.65 | $1.06 | $1.47 | $1.89 | $2.30 |
| CAC (per member) | ≈$0 at scale | ≈$0 at scale | ≈$0 at scale | ≈$0 at scale | ≈$0 at scale |
| Support Ratio | 1:1,500 | 1:2,000 | 1:2,500 | 1:2,500 | 1:2,500 |
| GROWTH METRICS | |||||
| Revenue Growth YoY | - | 608% | 284% | 156% | 103% |
| Lives Growth YoY | - | 333% | 177% | 100% | 67% |
| Premium Revenue % of Total | 0% | 39% | 56% | 66% | 72% |
Cash Flow & Capital Efficiency
Cash Flow Statement
| Metric | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| OPERATING ACTIVITIES | |||||
| EBITDA | $112,900 | $3,397,500 | $17,180,800 | $53,882,200 | $119,456,000 |
| Working Capital Changes | ($50,000) | ($200,000) | ($500,000) | ($750,000) | ($1,000,000) |
| Net Operating Cash Flow | $62,900 | $3,197,500 | $16,680,800 | $53,132,200 | $118,456,000 |
| INVESTING ACTIVITIES | |||||
| Technology Development | ($150,000) | ($250,000) | ($500,000) | ($750,000) | ($1,000,000) |
| Net Investing Cash Flow | ($150,000) | ($250,000) | ($500,000) | ($750,000) | ($1,000,000) |
| Net Cash Flow | ($87,100) | $2,947,500 | $16,180,800 | $52,382,200 | $117,456,000 |
| Cumulative Cash Position | ($87,100) | $2,860,400 | $19,041,200 | $71,423,400 | $188,879,400 |
Channel-Specific Unit Economics
Employer Group Unit Economics
- Price: $0.65 PEPM
- Marginal cost/user: ~$0.05–$0.07/mo
- Gross margin: 90–92%
- Distribution cost per contract: low (Business Development-driven, not Customer Acquisition Cost [CAC]-driven)
- Lifetime value: extremely high (multi-year employer retention)
DPC Unit Economics
- Price: $0.65–$1.00 PMPM
- No direct acquisition cost per member (clinic bundles us into their membership)
- Churn extremely low (clinic retention drives engagement)
Upsell Unit Economics
- Price: $165 per month
- Gross margin: ~75%
- Extremely high Lifetime Value (LTV) (12–18 months expected)
Key Financial Assumptions
- Employer Group lives scale to 5M by Year 5
- DPC lives scale to 1M by Year 5
- Conversion to premium: 1% by Year 5
- Upsell ARPU: $165/mo
- Gross margin: 90%
- CAC: effectively zero (distribution partner-owned lives)
- Employer and clinic contracts modeled as multi-year relationships (3–5 year average duration)
- AI reduces human support ratio to 1:2500–5000
Sensitivity Analysis
Upsell Sensitivity (Y5)
| Conversion | Premium Users | Upsell Revenue | Total Revenue |
|---|---|---|---|
| 0.5% | 30,000 | $59.4M | $106.2M |
| 1.0% | 60,000 | $118.8M | $165.6M |
| 1.5% | 90,000 | $178.2M | $225.0M |
Lives Sensitivity (Y5)
| Total Lives | Base Revenue | Total Revenue |
|---|---|---|
| 4M | $31.2M | $110.4M |
| 6M | $46.8M | $165.6M |
| 8M | $62.4M | $220.8M |
Use of Funds ($1.6M Seed Round)
| Category | Amount | % of Total | Allocation Details |
|---|---|---|---|
| Product & Engineering | $520,000 | 32.5% | AI voice platform, automation workflows, messaging infrastructure, partner APIs |
| Growth & Commercial | $400,000 | 25% | Employer Group/DPC partnerships, enterprise sales, channel development |
| Operations & Support | $520,000 | 32.5% | Salaries/wages for care coordinators, operations team, and support staff |
| Compliance & Legal | $120,000 | 7.5% | HIPAA alignment, SOC 2, partner contracts, regulatory review |
| Working Capital | $40,000 | 2.5% | Operational flexibility and vendor management |
| Total | $1.6M | 100% | ~18-month runway, with cash-flow breakeven around Month 15 |
Milestones by Fund Usage
Lives Under Management Path: 150k → 650k → 1.8M → 3.6M → 6.0M
Month 6:
- ✅ 75,000 lives under management (50% of Year 1 target)
- ✅ 1-2 Employer Groups, 10-20 DPC clinics
- ✅ Premium tier launched and tested
- ✅ Full AI + messaging automation platform deployed
Month 12 (End of Year 1):
- ✅ 150,000 lives under management (Year 1 target achieved)
- ✅ 2-3 Employer Group partnerships, 20-40 DPC clinics
- ✅ 750 premium members (0.5% conversion)
- ✅ $1.2M ARR run rate
Month 18 (Mid-Year 2):
- ✅ 400,000 lives under management (on track to 650k by Year 2 end)
- ✅ 4-5 Employer Group partnerships, 50-60 DPC clinics
- ✅ 2,000 premium members (0.5% conversion)
- ✅ $5M ARR run rate (on track to $8.3M by Year 2 end)
- ✅ Cash flow positive trajectory
- ✅ Series A ready
Key Performance Indicators (KPIs)
Growth Metrics
- Lives Under Management: 150k → 650k → 1.8M → 3.6M → 6.0M
- Employer Group Contracts: 1 → 5 → 15 → 30 → 50
- DPC Clinics: 20 → 75 → 150 → 300 → 500
- Premium Subscribers: 0 → 1,625 → 9,000 → 27,000 → 60,000
Unit Economics
- Gross Margin: Maintain 90%
- Modeled effective CAC per member: ≈$0 at scale (one-to-many distribution via employers/DPCs)
- Support Ratio: 1:2500+ through AI automation
- EBITDA Margin: ~10% → 41% → 54% → 66% → 72% over five years
Operational Efficiency
- AI Automation Rate: 95%+ of routine tasks
- Human Touch Points: <5% require human intervention
- Platform Uptime: 99.99%
- Integration Speed: Seamless with new Employer Group/DPC
Investment Highlights
Financial Strengths
✅ New Category Creation: Life Care Platform addressing universal execution gap
✅ Massive Distribution Leverage: Employer Groups and DPCs provide instant access to millions
✅ Software Economics at Scale: 90% gross margins with near-zero marginal cost
✅ Three Revenue Streams: Base PEPM + clinic fees + high-ARPU premium upsells
✅ AI-Powered Efficiency: 1:2500+ support ratio through automation
✅ Predictable Growth: Partner-driven distribution eliminates CAC
✅ Path to $660M+ Valuation: $165.6M ARR at standard 4× multiple = $662M by Year 5
Financial Assumptions
For detailed assumptions and methodology, see: Financial Assumptions Documentation